Is Snappy Auctions a Great Franchise Opportunity?
April 20, 2007 by Sean Kelly
Filed under Business
While the largest, most celebrated eBay drop-off store franchise concept , iSold It, has closed 60 stores, suspended domestic franchise sales and warned it may be on the verge of collapse, its next-largest competitor remains upbeat and continues to promote its franchise program.
In a company press release, Snappy Auctions celebrates inclusion on the list that made iSold It famous:
Snappy Auctions has been listed in Entrepreneur Magazine’s Franchise 500 list for the first time… With over 63 units open, Snappy Auctions ranked 309th in the survey, in only its 2nd full year of operation. The Nashville, Tenn. based franchise enables customers to make money off of items that are sold on eBay…
Snappy Auctions CEO Debby Gordon claims that Snappy Auctions is not suffering the same fate as competitor iSold It. In fact, snappy Auctions is doing phenomenally:
“We are poised for a phenomenal 2007, after an incredible 2006,” Gordon continued, “and this accolade is just the beginning.” In 2006, Snappy Auctions launched Snappy Sales Solutions, S3, which has contributed to its recent success. “S3 is yet another step toward our goal of changing the way businesses get value from retired equipment and inventory.”
Snappy Auction also boasts having been named one of Franchise Business Review’s Franchise 50, which honors franchise systems based on outstanding franchisee satisfaction through owner surveys and comments.
According to a Ina Steiner’s column on AuctionBytes.com, “Despite the challenges, Snappy Auctions CEO Debbie Gordon believes in the concept and says it’s all about execution.”
Can Snappy Auctions really be succeeding while iSold It, with much the same business model, is fighting for survival? Have they successfully overcome the challenges that eBay drop-off store critics contend make the concept unworkable? What do you think?
YOU’RE INVITED TO LEAVE A COMMENT ON WHETHER YOU THINK SNAPPY AUCTIONS IS A GREAT FRANCHISE OPPORTUNITY.
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Know a great new franchise? Nominate them a TopNewFranchises.Com
Sean – To answer to question regarding a brainstorming thread. It wouldn’t work because there is a major difference between this industry and others.
All of the franchises run the stores correctly, the major factor is the quantity of items taken in and sold. The more the merrier, and if you can keep that formula up you will make money – it’s true with any business obviously, but this one that is what people don’t talk about, how key that is.
There really is nothing to brainstorm about, it’s a numbers game. Everyone probably knows how to market, talk to Chambers, talk to your neighbors…get referrals, etc. All of that is Business 101, but if they have no damn items then forget it. It’s that simple.
Hillary and I were always amazed at the apathy of our fellow owners and I’ll include ourselves in this category too. Every other week we would all join in on a conference call to listen to Debbie & company tell us the business is all balloons, cupcakes and rainbows. Did anyone ever chime in and say, the reality is not matching the Snappy sunshine, not while we were on the calls! Furthermore, an Intranet forum was made available for all owners to talk about & exchange almost topic. It was all but unused (or censored?). In the end, franchise owner apathy met customer apathy after a few trips to drop things off resulted in ebay prices for their items, minus the store cut, PayPal gouging and ebay fee’s, or close to 50% of the ebay selling price in the form of a check that took about 6 weeks to reach the consigner.
Oh yeah, what marketing wizard sends out a mailing to existing customers informing them that the beatings will continue until morale improves? Raising store commision rates to 38% and informing the customer base in this manner is about as ill-based as my decision to get a haircut on Air Force One while on the tarmac at LAX thus causing a huge west coast air traffic snarl & delay that lasted the rest of the day….
How do I get my posts removed from this site?
This email went out last week, and was responded to the same or next day. It is all very typical of the issues inside this franchise system, Isoldit, Snappy, Quikdrop, or others. Perhaps it will enlighten those of you on WHY this concept does not work and never will. I have commented -have fun!
Sent: Sunday, July 22, 2007 11:47 PM
To: whatth@getoutwhileyucan.com
Subject: Important information for eBay drop off stores
You need to know the truth about Ebay drop off stores. ISoldit has closed over 60 and stopped selling franchises. Snappy Auction stores have closed in many locations including their flagship Manhatten location and 3 in their home town of Nashville.Auctioning4u is dropping its stores.
Learn more about the truth if eBay drop off store franchises here:
http://www.amitheonlyone.org/
See how lives are being ruined by ISoldit, Auctionin4u, Snappy Auctions, Auctiondrop and the like. Why aren’t these franchises growing? Why are they closing like CRAZY!!!
The Snappy response!!!!
Debbie: Many of you have received an email regarding Snappy Auctions and the drop
off industry. We believe the email originated from someone within the
Snappy Auctions franchise network. They are directing people to a site run
by two people (Karen and Gene) who are former iSold It franchise owners.
They claimed they were defrauded by iSold It, but have also decided to aim
their anger toward all franchisors including Snappy Auctions. They started
the website almost two years ago, but have really begun actively contacting
other franchisees over the past few months. The people running the website
have declared that their personal mission in life is to encourage other
franchise owners to close their business.
Comment: AmITheOnlyOne.org does not solicit or encourage anyone, they listen and offer helpful advice to those asking for help. And they do it for free. They publish excerps from franchisees, of the truth, with no anger aimed at any franchisor. However, if the franchisors seem to have a problem with the truth being out there, perhaps they are feeling guilty. Otherwise, why gag their former franchisees. I understand that Gene offered to help Debbie’s franchisees teach their sellers what to bring in to sell, and her comment back was “Are you kidding?!” What is it you don’t get Debbie, Gene was VERY serious!
Debbie:People are entitled to their opinions, but there are some things written I
would like to address specifically that are implied as facts but are simply
untrue.
Comment:Franchisees are NOT entitled their opinions if they disagree with the franchisor. The only facts available are those of the slanted franchisors. Hummm…what is wrong with this picture?!
Debbie:First, Snappy Sales, LLC and all of its affiliate companies have no
litigation, arbitration, or mediation against us, both past and present,
with anyone including franchisees, customers, etc.
Comment:How sure of this can you be? I am personally aware of more than one issue, and gag orders only delay the truth.
Debbie:Second, all monies allocated for customer payouts are held in an escrow
account managed by First Tennessee bank. Any implications about our
practices with customers’ money are simply untrue. The recent accounting
error was indeed a human error but never did any of your funds leave the
escrow account before they were sent to the payment processing service.
Comment:Seems that you are having a bit of an accounting problem, no matter who you blame. And none of the franchisees can fully track all monies. (Yes Sean, Corp can sweep their account any time, any amount!)
Debbie:Our legal counsel is looking into this and we are tracing the origination of
some entries and the email you received. People are entitled to free
speech, but defamation of our company and breach of confidentiality by our
franchisees, including publicly sharing internal communications, is
unacceptable and legal grounds for termination.
Comment:Lets run scared, intimidate the franchisees instead of trying to work with them (Sean: This is exactly WHY the franchisees won’t speak up! They are NOT entitled to FREE SPEECH or they will be terminated)
Debbie:Franchise owners are independent business owners, and yes, some will fail.
We have had stores close over the past few years. Stores that have closed,
failed, or are struggling are not a reflection of your individual
capabilities as a business owner. As we move forward, I encourage all of
you to remember that you are in control of your business with the full
support of the corporate team.
Comment:Not some but MOST (a few have deep pockets) are failing. (The problem is Sean, that NOT ONE is making money in ANY franchise system). The few that claim they are breaking even, are not paying themselves, or not paying back their startup loan, and MANY are working outside the system, selling on another id or not reporting income, or are purchasing palettes, say from China manufacturers, and reselling. This concept is not a winning prospect!
Thank you,
Debbie Gordon | President/CEO
Comment: Open mouth, insert foot…
“How do I get my posts removed from this site?”
You can’t. However, you can post another comment retracting your initial comment, saying why it was incorrect, etc.
Best to get contractors in – they’ll dig round about a yard out untill they find the concrete footings, then they’ll bash them with a sledge-hammer untill they loose their structural integrity and crack, after which the posts should just pull out. If you don’t want to re-use them, try half cutting them with a saw, and then snapping them with a quick tug at the top.
Hope that helped!?
R. said: “…All of the franchises run the stores correctly, the major factor is the quantity of items taken in and sold. The more the merrier, and if you can keep that formula up you will make money…”
“Everyone probably knows how to market, talk to Chambers, talk to your neighbors…get referrals… but if they have no damn items then forget it.”
The point of marketing would be to get items in, generate trial from new customers, prompt repeat business from existing customers. If everyone knows how to get items, the key to success, why aren’t they successful?
How many people in your market have any clue what you can do for them, how your service works? My guess is: a lot fewer than you think. I’ve seen very little effective, creative marketing for this concept from any of the chains. Perhaps store owners don’t understand what marketing is, how it works, what it can do…
Anything posted under the follwing names is no longer valid and should be ignored:
Get Real
Mad Owner
Please ignore these posts as they could be viewed as “defamation” and should be considered invalid.
What is this supposed to mean? What is going on? Who is twisting the screws?
It is a very sad day GET REAL/MAD OWNER, when you feel you can not tell the truth. In fact it is NOT deformation if it IS the truth. When the store is losing money monthly, the consignors aren’t getting paid, and the software doesn’t function properly—you are allowed to say EXACTLY that! Do NOT let franchisors threaten and intimidate you, call a lawyer! Or talk with AmITheOnlyOne.org , and yes there are others feeling the same way.
Sean: No one has the answer to make it work. Larger $$$ items is not the answer, it takes a $300+ item for a $100 sale on ebay, of which the seller gets less than 50% (after fees). Most people don’t have a truck load of these items to sell. High end areas tend to donate items rather than sell them. What you are selling is not consumable (like water, makeup, toilet paper), and you are in full competition with all the other franchisees (unlike Dunkin Donuts who only sells to its specific area). Processing more items cost more than the return. Most people will not pay up front charges, and the franchisors use this for advertising (the little bit they do).
Branding in this franchise system is a joke-the franchisors spent X millions of dollars to SELL the franchises, NOT to bring people into the stores, so there is a strong lag in the public awareness, which will not do much good. Most people only get rid of junk, and junk doesn’t sell on eBay. Besides, once you have cleaned out the garage, there is no reason to go back to these stores(unless you have a full attic), so return customers has a limit.
As for making money at this thing, powersellers make money by elimainating overhead and selling in a niche market that they have knowlege of (that is not what an ebay drop off store is)!
And what it comes down to is franchisors who are fully aware of the issues, and continue to sell more misrepresented franchises, while mom and pop file for bankruptcy or start a website to get the truth out!
Go ahead Get Real, say what you mean!
Chance – And All;
Do you think someone has ‘got’ to Gotta GO/Get Real/Mad Owner?? Re. the above post and your stuff above – I apparently have a letter waiting at my mothers place from Auctioning4u. It would seem the bosses are talking/trying to silence us?????????
Will pick it up at the weekend – watch this space!
I think we’re getting through the message!
Chance
you posted while I was writing, You’re right about the funding being toward selling the clouds to potential franchisees rather than the brand to customers.
At A4U (while I was there, I can’t talk for the period after I left – a year ago) advertising consisted of paying a Guy on a bicycle to drive round putting leaflets on car windscreens in the two or three of the wealthiest boroughs in London.
There were also ad’s in Saga Magazine at some point and I fought to get ad’s in Collectors Gazette. Indeed one of the reasons Christian calls me ‘Difficult’ on the “will Auctioning4u save…” page is because at all three or four official meetings I had with him my number one, scratched-record topic of conversation was; where is my marketing budget? why has it been reduced? When will I see it?
Saga is read (predominantly) by the affluent retired who want to shop for cruises, sort out inheritance tax and find out what the Fashion in shrub roses is this season! they cleared out their clutter years ago to buy the villa in Porto Vanusse.
While the drivers of the 4×4’s and sports saloons we were leafleting in Chelsea, Kensington and the like, send their maids to the local Charity shop when they dump last months shoes!
Fact – anywhere in the UK, a silk tie in a Charity shop is £1, in Notting Hill they are £6/8 in the same charity shops. Even if they had come to us what would we do – less than £30 – Sorry! And if we had taken them they’d sell for 99p.
Recap?
Concept doesn’t work, probably never would have, unlikely ever to do so, never been properly supported by the parent/Franchisor companies, and now the bosses are getting pissed off with our pointing out these facts!
At the risk of appearing contemptuous; F**k’em they’ve f**ked us!!
Well it looks like Snappy strikes again. It’s just like they say on amitheonlyone.org.
Most likely threats and intimindation on part of the franchisor. This is not new.
I wonder what is was this time. Threat of contract termination, or possibly a threat of a lawsuit. Typical.
Unfortunately for them, they forgot rule #1 of marketing and guerilla warfare: use the press to your advantage. By trying to silence GET REAL, they just prodded us on to do MORE!!!
By now the word is getting out. They can’t stop it.
Does anyone know if the stores (ISoldit, Snappy Auctions, Ubidit) really know what is going on? Number Cruncher showed us some pretty interesting numbers and even though “R” (can you say someone from Snappy Auctions) tried to poke holes in the numbers, they couldn’t. How do we get them message out to the stores without getting hit with threats of lawsuits?
Get Real, can you tell us what happened or are you under threat of lawsuit for telling the truth? Your silence will confirm our thoughts on you being threatened with legal action.
Since “R” brought up a new point (obviously from franchisor point of view) let’s discuss this new twist they’re trying. They say anyone starting one of these businesses should be in for 3-5 years before they expect to see a return. EXCUSE ME! That’s not what franchisees were told. I seem to remember an article where Debbie Gordon stated 6-8 weeks to break even. That doesn’t sound like 3-5 years. Also, why do you buy a franchise? Because they are supposed to have worked out the model! You’re paying for their “expertise”. 3-5 years is normal for starting your own business.
What’s next Snappy? I need to sit down. My head is already spinning from their response.
I was merely saying that the numbers that this particular person was pulling from Terapeak did not include eBay Motors sales. From what I have seen, these stores (I soldit, QD and Snappy) can sell vehicles and parts alike.
I imagine that the 6-8 week time frame was meant to explain the time in which you would not be taking from your startup money to fund the store. That would never mean that you would pay back your investment in that time frame…if you thought that then your head should be examined.
So you’re telling me that by opening a franchised store, you’re not starting your own business from the ground up? That’s interesting.
I don’t doubt that stores are not doing a ton of revenue, but it’s all relative isn’t it? I bet Not everyone has high rent and a ton of overhead.
Ben: The numbers have been broken down on AmITheOnlyOne.org, and many of the franchisees were told three to six months to breakeven. NO type of store makes it 3 to 5 years dumping $$$ in every month unless they have deep pockets and need for a writeoff.
How about just not having to dump thousands of $$$ into the store every month (like we have all had to do) just to keep it going! We are not talking money that is spent getting the stores up to snuff. And these stores have little to NO assests to sell off, you might get $10,000, and that won’t dent the $100,000+ startup fees incurred.
Just because ALL the stores are doing piss poor, it can’t mean that THEY have a problem, it must be you….sure!?! You know it is ALL your fault, you chose the wrong location (that they approved), you hired too many (what they reccommended), and your not selling high enough priced items (although you were told $30+ starting at 9.99), and you are not cutting costs (more items=more overhead).
Lets get real, if anyone found the best area, high items, worked 90 hours a week without pay, it WASN’T the franchisor! You did what you had to to keep it going. So pat yourself on the back! You are not the one propagating the lies -they are, and the truth hurts!
The franchisors are running scared, otherwise why would they threaten or gag their franchisees, and yes they are doing both! This is an unproven concept, that does not work, and a closing rate of better than half only proves that! In fact if it is THAT great, why don’t these franchisors buy back or own more corporate stores???????Hmmmmm!
Hey R: lets talk about motors. First of all, each state has different laws allowing or not allowing the sale of cars, and second I and many others did not open a store front to be a used car salesman, or auto junk yard. By the way there is more than Terapeak out there and the $$$ still look BAD, even counting motors. (Sean: Did you know that most zees might make a whole $250 on a car sale of $10,000 or any amount. What does that do to ones ebay sales number? Lets say they sold $$20,000 less 10,000 = 10,000 in full eBay sales at 35% commission thats $3500+250 = $3750. I can guarentee even with LOW overhead, you didn’t make the bills, and we won’t even get into the shipping problems with auto parts).
So R, perhaps you need to rework the math on a more practical level, or try running one of these stores competely by the system (many of the stores sell cars off the books just to help pay the bills). As I said-I and most of the others did not get into this business to be used car salesman or a junk yard!
Man, Chance, you are a bitter one. You didn’t know this would be hard when you got into it?
What’s the median income of your city per household? Do you know? Do you think that makes a difference?
This isn’t “hard” R, it is ridiculous! The reality is that the concept does NOT work. And the people around here in $500,000 homes, won’t make the concept work either! A BAD concept, and a BAD franchisor are the issues, and looking at the world thru rose colored glasses doesn’t make me bitter or help save any of these stores. How many other UNTESTED concepts do you have to offer? Are YOU going to pay for my childs college education, my retirement, and for the home of those bankrupting – I don’t think so! Time for you to come out of denial.
Hey Ben, Hugh, or Bill: Did you go into this to be a used car salesman? (Although, the junk yard might be fun)
Yes “R” I meant that you’re not starting a new business. I meant you’re opening a franchise. Do you think each McDonalds has to learn about marketing, product selection, system development everytime they open a new location. No, the franchisor has already done all that research and can provide proven marketing, proven systems and proven processes and even brand recognition.
I’ve started a business from scratch and I’ve opened a franchise and I can tell you, starting the business was totally different. You see, you supposedly buy the expertise when you open a franchise that you hope to avoid when you open your own business. You trim off all that time and learning curve.
I need to find the article where Debbie Gordon said she expected the stores to pay off start up costs in 18 months. While I’m not dumb enough to think you can pay off your debt in 6-8 weeks, the franchises were told they would be at break even in 6-8 weeks. After that you had 18 months to repay your start up costs.
Now for the $60,000 question? How many stores have consistently broken even, even after 6-8 months?
‘R’ in in denial.
Because we can by now assume from the posts that he/she/it is in the higher management/PR/marketing of one of the ‘eBay consignment franchise selling drop-shop-model cloud merchants’, this denial can be called Hubris.
David Owen, one of our ‘Elder Statesmen’ type politicians and former Boss/Governor of one of the busted bits of what was Yugoslavia, has recently released a book (or paper?) on Hubris and it’s relationship to the likes of Nixon, Bush the Younger (or should it be Bush the Cowboy?), Blair, Late-era Thatcher et al.
It is the belief that one is walking on water, that one ais 100% right and all around one are misguided fools who can’t see what one can and just won’t listen to one’s ‘genius’. In the case of ‘R’ and ‘Ptom’ (and I would argue – of course – Christian Braun, my own personal opinion naturally!), this is caused by an inability to believe it is as bad as it is, primarily, I suspect, because the head offices are awash with franchisees’ cash and Wall Street/City of London funding. This leads people conditioned by their immediate superiors (or – at the top – themselves!) to believe the dream is ongoing and the goals still attainable. The ‘Problem? what problem?’ syndrome.
We have shown them the problems. For them to continue trading now is – in some countries – criminal negligence, and in others shear bloody mindedness.
It is our job now to ensure that all authority’s dealing with the control and regulation of financial/commercial matters learn what has come out in these pages, so that the ‘eBay consignment franchise selling drop-shop-model cloud merchants’ can’t say they didn’t know.
After all, we know for certain that Debbie and Christian have been following these posts. So if they are close to folding, and are not preparing redundancy packages for their staff NOW, they need ultimately, to be held accountable.
I will be sending an edited version of this post, with links to the main A4U, ISI, and Snappy pages to the Office for Fair Trading, Financial Services Authority, Dept. for Trade and Industry (or the replacement Org.) and eBay Europe (as I believe they need to start taking some responsibility for the monster they’ve created).
The media will eventually pick this story up and start looking for scapegoats; anyone who’s been warned of the situation will have some uncomfortable questions to answer.
Chance – I sold my Volvo Estate (940 Auto – in red, loved it) on eBay for spares, I’d blown the engine driving up and down the bloody motorway for you-no-who and his empty promises. It was also missing a window!
It sold under A4U’s 99p model for . . . wait for it. . .£1.97p! (slightly under $2!!). So keep me away from your Auto-sales venture, unless you want me to valet them, I can do that!, upholstery, tyre-shine, bumper-gel (fenders!) small dents, the works!!!!
We’ll call it iSoldSnappyCars4U!
Well just wanted to let you guys know my wife and I drove by the Snappy in our hometown and they were shut down. It looks like they are done. It doesn’t surprise me as they did a terrible job. My previous post will tell you my experience there. We live in a very nice area that has an average household income over 90k but nobody is too keen on paying out 38% plus ebay fees to sell something. The service was terrible and I felt they sold items for less than if I would have listed them. At least I would have known to wipe the dirt off golf clubs before taking the pictures. I am in Franklin TN which happens to be just south of Nashville. After I got pissed I started to watch their listing site and I knew there was no way they would make it. They were listing very few items and most of it was junk. The rent had to be very high at that location. I only found this site because I was checking to see what other consumers thought of Snappy. I couldn’t believe what I read here. It’s really a shame some people got involved with the company. I don’t see how you could make any money. Best of luck to all.
Well Mike. You hit it on the head. They couldn’t survive. And while it looks like you had a bad experience, I looked up snappyauctions40 and they have a 99.9% feedback on 2481 items on eBay. Sounds like they did a pretty good job overall. Sorry to hear about your golf club.
The best thing you said was that you found this post on the web. That’s great news. Now we know the word is getting out.
OK crew, I think we need to take a look at what’s going on here. If NUMBER CRUNCHER is even 70% accurate, the stores cannot possibly be getting by. What else can we do to get the stores to get out from behind the fear of failure, the repeated “new ideas” coming out of corporate that promise increased sales and the intimidation these franchisors use on their stores?
I don’t want to see any more owners suffer any more than they already have.
Oh, and since Mike has pointed out that the store in Franklin, TN just closed, that makes 4 Snappy Auctions that have closed in the home town of Snappy Auctions. What does that tell you??
4 just in the Nashville area? Anyone know how many Snappy Auctions stores have closed overall?
I found 5 more just by querying Snappyauctions as a seller in eBay. So at least 9 by now and probably more since they don’t publish this kind of thing. That’s close to a 20% failure rate, and it’s climbing.
Since they haven’t opened new store in some time, that % will only get worse.
A more interesting statistic/piece of data would be -
Of all the drop-shop and consignment stores that have opened, both independent and franchise/chain, across the world, how many are still open? how many have closed?
I have an idea (don’t know where from, hearsay?) that it’s something like 800 out of 1,200 failed. In the UK it’s around 40 out of 65 odd – that I know about.
Both point to a current fail-rate of around two thirds – minimum! A rate that can only increase (as a percentage) as they stop opening new one’s but continue to close existing ones.
Indeed, asking the relevant trade bodies for that information will be one way of alerting the powers-that-be, the ‘great and the good’ of the minor crisis unfolding on these pages, and strangely – only these pages.
And yes – I know it’s not ‘minor’ for the people involved, but in the wider world that is how it will be viewed.
Hugh: A practice/phenomenon known as “churning” further obscures the failure rates of franchises – especially in the U.S.. Franchisee A invests $300K to build a new franchise location, but his costs are too high so he bails out, selling to Franchisee B for $150K and taking his loss. Franchisee B, even with lower upfront cost, is losing money and sells to Franchisee C for $50K. Although two franchisees have lost their investments ($150K & $100K) in this scenario (because the model is not viable with the start-up investment level), neither of these will show up in the disclosure documents as a “failure,” only a “transfer.” So, in theory, an un-viable concept can have an extremely high failure rate of first and second owners, but boast that they’ve never closed a store, and appear as a widespread success story. New franchisees line up with their $300K initial investments, thinking they’ve found a shortcut to the American Dream.
Anyone ever figure out what happened to GET REAL?
It seems that Get Real was threatend by his franchisor, Imagine that!
Sean: The transfer issue is a big problem in franchising, in fact some have competely set up a store in another state, with new owners and called it a transfer. Most of the time the UFOC’s don’t have alot of the actual closings or transfers, and the phone numbers to call of those listed are bogus. So a prospective new franchisee doesn’t get the full picture.
I see that Snappy Auctions of Asheville, NC has closed it’s doors a/o 7/27/2007. It was open for about 2 years. I think that was Snappy’s last NC franchise.
Hillary and I have done the math: Thats FIVE that have folded their tent in the Carolina’s, with one left on life support….
How did you know Asheville NC closed? They still have items open on eBay. If they’re closed, Snappy should be clamping down on use of the Snappy name and telling them to change their eBay account name. That’s normal franchise procedure.
What’s the average median income in Asheville?
$32,000/yr. Exactly.
I don’t know what else to say. You all just have it out for Snappy/ISI/Quikdrop, so you really can’t see past the fact that these stores are only going to survive and thrive in wealthy areas. The concept doesn’t seem to be broken, just saturated.
R.
Aug 7, 2007 at 11:43 am
What’s the average median income in Asheville?
$32,000/yr. Exactly.
I don’t know what else to say. You all just have it out for Snappy/ISI/Quikdrop, so you really can’t see past the fact that these stores are only going to survive and thrive in wealthy areas. The concept doesn’t seem to be broken, just saturated.
********************************
re: R
Hillary and I were wondering what the median income is for Manhatten (NY, NY), once home for snappyauctions5, but closed suddenly in the middle of the night. Can you enlighten us? Thanks.
Well I’m not back, but I’m using this name in memory of GET REAL. I’m guesing he/she was silenced by a franchisor, but he/she is not forgotten. People telling the truth often have this happen to them.
Anyone know the total number of ISoldit stores that have closed? We need a post that tracks all the stores that have closed. Sean, any ideas?
Also, how can we get this site bumped up on Google so it shows up higher in the list? More people need to know THE TRUTH!!!!!
GET REAL…..we miss you.
R., R., R.. Or rather should I say “McFly…..McFly…..!!”
Read back to a posting by MAD OWNER. It references a closed Snappy store in the “12th most affluent county in the USA”. How wealthy do they have to be!? NUMBER CRUNCHER pointed out the real numbers (minus car sales and most stores are lucky to get 10% on cars with almost 1/2 of that going to franchise fees). Yes it might work, but only if you were lucky enough to buy a franchise in one of those rare locations. It does not work everywhere. So, if that’s true and only a small portion of stores fit that criteria, how about the rest of them? What’s going to happen to them? I think it’s just a matter of time.
Well folks, Isoldit has opened aprox. 260 stores (of the 900 they said they have), and only 145 stores aprox. stll open, with one a week or more going down on the average. That is damn near half, and of those, more than half again were in VERY wealthy areas (you know million $ plus homes).
So “R” what is it YOU just don’t get? These stores are folding up faster than ice melting in the Georgia heat!
Sudo GET REAL, nice tribute to the weary.!
R. wrote that “You all just have it out for Snappy/ISI/Quikdrop, so you really can’t see past the fact that these stores are only going to survive and thrive in wealthy areas. The concept doesn’t seem to be broken…”
I am shopping for a franchise and found that iSold It charges a $22,000 franchise fee for an exclusive territory designated by zip code(s). Snappy Auctions charges a $25,000 franchise fee for an exclusive territory. R.: If franchise companies are selling territories that they know are not workable, isn’t that fraud? Why did Snappy Auctions sell someone a franchise where the avg. income is too low? I’m no expert, but it seems like that’s either deceptiveness or incompetence. The reason I’m looking for a franchise is because I want guidance on how to successfully start their business. They should at least tell me if a markets viable. Otherwise, what are you paying them for?
Franseeker
These franchisors are no different then other franchise companies. They offer a franchise that can be located anywhere as long as there is not another existing franchisee.
The actual sites are determined much later after the franchise is sold. Its 100% the franchisees decision. This gives the new franchisee as much time as they need to decide if any certain city is right for them and to speak to the existing franchisees about their sites before making a decision.
In my experience new franchisees always want to open a store in the town the live in and thats the problem.
They really think their hometown is going to make their business sucessful and even after a franchisor tells them over and over again not to open a store there, many times they just will not listen because they know better and believe in their hometown.
Why would anyone in their right mind open a store in a very average town like Mansfield, OH
or Woodstock, GA or any of some of the other ones I have seen in the closed section of the franchisors UFOC.
Then the franchise whines, the model does not work.
Bacon & Eggs: In researching franchises, I have discovered two kinds of franchisors. One is dedicated to creating a successful system that benefits franchisees and is designed to prevent failures in advance. These franchisors are very selective about which franchisees they accept, and just as selective about markets and locations they’ll approve. They will not approve locations that do not have a high likelihood of success, or that have unfavorable terms. After all, they have the experience, they are the experts.
Others are more Darwinist. They seem to feel that anyone who falls for their sales pitch gets what they deserve. They abdicate responsibility with the argument you pose. Franchisees put their trust in FRs to guide them firmly to proper & successful implementation of their proven concept. Sorry, but “the franchisee picked the location” doesn’t get these FRs off the hook. They may get away with it, but they’re just lowlife con-artists.
Bologna and Eggs:
Nice attempt to blur the difference between “markets” and “locations” Franchisees don’t determine which markets are approved for franchising. If the Asheville market doesn’t have the demograhics needed for a given franchise, a good franchisor doesn’t sell the rights to that market. that would be fraud.
Franchisees are often responsible to find their “locations” inside an approved market. That’s a matter of picking a particyular strip center or a storefront location – not the same as deciding on a demographic market.
Every statement you made to Franseeker is wrong. Do you really believe McDonalds would let a franchisee open a franchise that didn’t meet their population, demograhic and traffic requirements? Of course not. Because they’re in the business of creating successful restaurants, not just collecting franchise fees from suckers. But then again, you know that, dont you?
OK R. You have a point. Sort of. While the 3 most successful Snappy stores are in wealthy areas (thanks NUMBER CRUNCHER) they are not the only stores that are or were. I read where one of the stores that closed (see MAD OWNER above) was in the 11th most affluent area in the country and it closed from lack of interest.
It only seems to work in very wealthy old money areas and marginally there at best.
To Bacon and Eggs:
Well, most frachisors have the requirement to approve a site written into their agreements. They have the ability to disallow a location, they just choose not to. What’s the downside for them? They don’t have to live with the debt or the high rent leases. They get the money up front and then they just blame it on the franchisee. Not enough marketing, not enough time out selling the concept. If it ain’t there, it ain’t there.
Why in the world would Snappy Auctions allow a franchise in a location where the average income is $32,000? Do they think people have hoarded silver and Cadillacs just waiting for a Snappy Auctions store to show up?
While the stores have to take some responsibility, they look to the franchisor as the “expert”. That’s why they ask for site approval. They presume some analysis has gone into the decision to approve the site.
I see we have a few newcomers to this fantastic discussion.
I don’t know what you’re referring to with Snappy’s Manhattan store, but I’m sure there was a good reason for closing it. None the less, isn’t the space in Manhattan over the top expensive?
My ultimate point is that these stores are not going to survive in a low/medium income area.
Kudos to Asheville for rolling with it as long as they did…when you boil it down, stores in these areas will ultimately close, not from doing a bad job or not knowing that they’re doing, but from simply not having enough to sell.
Anyone look into the QD numbers? I’d be curious to hear how Quikdrop owners feel about what they are going through. Sean, you should post a Quikdrop blog, see what they have to say.
From what I understand, they are closing faster then anyone.
By the way, selling someone a concept in a low income area isn’t fraud. That’s a new business owner thinking it will work in that area, who’s to say it won’t on paper? The point is that if someone in Asheville buys an iPod today, they will have no desire to upgrade it. They will wait until they drop it in two years and buy a new one (because it’s a HUGE purchase for them). There is little need for a store like these because not many people have the “upgrade” desire…overall, liquidation and upgrades are what seem to drive these stores.
I mean no disrespect by pointing out the income issue, but it appears to be a very important part of these stores. If one fails in a huge market, it’s likely because that income level was cut by 1/4 because there are TOO many stores in the area…once that fraction goes down, and they have a larger run of the population, the numbers will skyrocket. At that point it’s about who survives will thrive.
I am a franchise store owner in the Midwest (no names, places – you all know why, I’m sure). I have been following this thread avidly, as so many of these issues apply (or have applied) to my store over the course of our first 2 years in business. We have now been open almost 27 months, and are starting to see month-to-month positive cash-flow. This is about 4 times as long as corporate indicated it would take, and the only reason I’m still here is because I believe that the concept is sound. It’s the implementation details that are critical: low monthly overhead (rent, payroll, etc.). and operational efficiency chief among them. 2 years of constant advertising (focused on low-cost niche publications that target our market demographics) and networking (my BNI chapter rocks!) has also paid off. We have seen several other stores come and go, and we are now essentially the only game left in town.
The recent point made about a local economy that thrives on upgrades is well-taken. We have many repeat sellers who feed their habit of designer handbags, electronics, cameras, etc. by selling the older model to recoup some $$ and help pay for the new.
Since anyone on this forum who dares to speak a positive word is immediately rejected as a franchisor posing, no, I am not a shill for a franchisor. If I had to do it over again, I’d be independent from the start (and much less in debt, believe me). I’m essentially independent anyway, as what corporate touts as a “system” doesn’t work, and I have to figure it out on my own anyway. And the community I thought I would have in the other franchisees is more than adequately filled by the overall eBay community.
Am I where I want to be yet? Absolutely not! But we are getting there. And we are actually managing to have some fun along the way, as both our sellers and buyers are, on the whole, terrific to work with. It’s just too bad the franchisors weren’t realistic up-front about how long profitability was really going to take. Regardless of how well-known eBay is, these stores are a new concept that takes time to catch on with the average Joe. After 2+ years, I only have a little over 1% market penetration. Plenty of room for growth!
To close, I agree with those who have said that only a few will survive (and I intend to be one of those who makes it). Demographics at this point simply don’t support more than 1-2 stores in a town my size (about 100,000) and avg. income of $72K in our ZIP code (per city-data.com).
Sean – thanks for the platform. What a great discussion!
While Bacon & Eggs and R flaunt their Corp crap, the rest of us who owned and ran stores, know that what they are saying is all bull. These franchisors approved these sites, that they NOW say weren’t good. In fact they have continually made it the franchisees problem by saying the franchisee was in a bad location, didn’t have a big enough draw, too much overhead, not enough business experience, and I LOVE the new one-”area not in high enough income level”. Lets use the Georgia Store as an example, there were 40,000 cars a day going past their store, in a $300,000 to $500,000 home area, with two owners who had plenty of independent business and sales experience. What did these franchisers do — they told the franchisee not to open 1 store, but three to five stores in their “protected area”, and pushed them to get the stores open. Oh yeah, another interesting tidbit is that the “wonderful and successful ” top Snappy store is in the SAME area, where SIX isoldits and TWO Quikdrops and FOUR independents have ALL closed! (Divide the snappy store numbers by 3 for the three stores that report as one, and their numbers are like everyone elses-this is one more misleading trick used by franchisors.) Another tidbit is that some people DID relocate to start a store in another area – that the franchisors suggested, and have since declared bankruptcy. Something is very wrong with this picture.
Yes Franseeker, it IS misrepresentation, or as others call it – fraud, and many franchisees can prove it. However, these same franchisors have gagged these franchisees, or threatened them, like our friend GET REAL! And the franchisees have no $$ to fight the big franchisors. That is how the game is played! There are NO drop off stores making a consistant profit! And the franchisors know this, yet they continue to sell franchises (on an “experimental” basis). Remember, it is NEVER the franchisors fault, it is the fault of the franchisee! Right!?! Contact the folks at AmITheOnlyOne.org, and I am sure they can get you a list of franchisees from each of these companies who will tell you the truth!
And “R”, the Manhattan store closed because the CONCEPT DOES NOT WORK, and the franchisors who knew this, were NO help! Imagine that!
PS. As for Quikdrop, there are a couple major lawsuits coming at them! Surprise! Surprise!
Gardner, my question to you is…how many hours do you work in your store, and are you paying yourself a salary, or do you not need one due to a working spouse? Are you paying on a startup loan (ie:SBA)? If No to both, how can you say it is breaking even, or is it that you are finally just not having to put ANY MORE money into it on a monthly basis. I don’t know about you, but I can’t work for free for two years! And you are so right…what the franchisors tout, does not work, so then you are simply a powerseller doing it your way, which has little to do with what they are selling?!
Those that survive will thrive?!??!
More like those who survive will do so because they are anomolies. They will most likely not see any appreciable increase in sales since the other stores in their area closed. The stores closed because people in that area didn’t want to pay for the service. I for one do not want to do business with an organization that is closing locations. I want someone with permanence.
Also, keep in mind, technology has changed in the last 2 years making it easier for people to sell on eBay. While there will always be a core of people who will use these stores, they will eventually fade away like VCR Repair shops.